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In conversation with Network18, former RBI Governor Raghuram Rajan said there is a real risk that inflation could get entrenched if the Ukraine conflict continues for long. But he adds that the West is looking to energise other sources of fuel supplies.

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Network18: Will the sanctions stick? In the past, controls imposed by Trump on Iran, China did not go away when Biden came in. Sanctions tend to stay, so therefore can this be structurally a longer inflation?

RGR: Yes, and I would offer a qualified no also. The unprecedented nature of the attack on Ukraine has galvanised the Western world along with Japan, so I think they are very serious about sanctions. This is a violation of any notion of the world order, so therefore it has to be pushed back on.

So, they are much more determined to implement the sanctions and prevent any leakages. That is on the Yes side. On the No side, given the kind of damage this could do to the global economy, Russia being a huge exporter of energy, critical commodities like Nickel, Palladium, Neon, Xenon as well as fertilisers and grains.

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I think there is a sense that the damage is to be limited by energising other sources of supplies. So, on the oil front, for example, we have talks going on with Venezuela, and Iran, in an attempt to bring Iran's oil back. And of course, Shale, which has been very very circumspect of production because they did not want to invest too much. Shale will also come back. So over a few months, the supplies will also start responding to the high prices even as demand starts falling because of the high price

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